Alabama

Shifts in the retail landscape across the Birmingham metropolitan area are leaving some cities wondering where their sales tax revenues went and others with newfound cash in their treasuries.

Across the area's two largest counties, sales taxes generated about 3 percent more revenue in the 2007 fiscal year than in 2006, data from local governments show. And while Hoover, the region's largest retail center, saw little growth, other areas that opened new shopping centers or superstores saw revenues from sales taxes skyrocket.

Pockets of double-digit sales tax growth emerged in areas such as Trussville, Leeds and Alabaster. Those areas have also seen more residential growth in recent years.

In Jefferson County, overall sales and use tax revenues increased 3 percent in 2005 and 3.1 percent in 2006. In the 2007 budget year, Jefferson County collected $96.9 million, a 2.1 percent increase.

In 2005, Shelby County had a 12.8 percent increase in sales tax revenue, and an 11.1 percent jump in 2006, from new retail along the U.S. 280 and I-65 sides of the county. In 2007, the $25.5 million collected was an increase of just 1.16 percent.

Alabama business, governmental and retail experts say the metro area is experiencing a rebalancing of where people live and work. One indicator of that is reflected in sales and use taxes.

"We are certainly seeing a shift from some areas to others, such as Trussville," said Mickey Gee, the University of Alabama at Birmingham's business executive in residence, and owner of The Pants Store.

Gee owns three locations across the metro area, with one in Leeds and his newest in Trussville. Trussville saw sales tax revenue increase almost 23 percent over the last year.

The shift, Gee said, is affected by major roads, affordable housing and significant new shopping areas, such as the adjoining Colonial Promenade and Colonial Pinnacle at Tutwiler Farm shopping centers in Trussville. Alabaster, with its new Colonial Promenade shopping center, had a sales tax revenue increase of more than 11 percent.

Other fast-growing areas for sales tax revenue since 2006 included:

Springville, with a new Wal-Mart Supercenter, more than 45 percent over last year.

Chelsea, with a new Wal-Mart Supercenter, more than 27 percent.

Leeds, with a new 1 cent sales tax to help pay off short-term loans, up almost 20 percent. Those figures are still being audited.

"The hot spots in the state will be where there are a lot of new retail developments," said Perry Roquemore of the Alabama League of Municipalities, which is based in Montgomery. "Alabaster is a prime example of that. You have citizens in Alabaster who were going to the Galleria and Hoover. That causes loss in revenue, which is what happens statewide as we get more of the same stores. People go where it's most convenient."

Statewide, the Alabama Department of Revenue reported an increase in sales tax collections of 2.49 percent. With inflation at about 3 percent, that was little or no real growth.

Overall, Alabama and the metro area mirror national averages, economists say - a year that's basically stable.

Most people shop within a few miles of their home, and new shopping meccas in Trussville and Alabaster are cutting into retail once dominated by, say, Hoover's Riverchase Galleria.

Hoover ended its 2007 fiscal year with $1.87 million less in sales tax than projected.

"I'm not shocked by the figures for Jefferson and Shelby counties" overall, said Sonny Brasfield of the Alabama Association of County Commissions. "All the indicators are that the economy has not been growing as much as the previous 18 months. Sales tax is the most economically sensitive tax we have."

For county governments, Brasfield said, stable incomes may not be enough to maintain current services and personnel.

"From a county government perspective, our costs never hold steady - never have, never will," Brasfield said. "Your employees expect an increase in annual compensation, and they should. You have to keep putting gas in vehicles, and worker's compensation and insurance for employees have been huge factors."

And while cities have some power to increase taxes, Alabama's counties are limited.

"All you can do is cut your costs, one way or another," Brasfield said. "Over 20 years, I've seen courthouses have to close on Fridays and salaries cut 10 percent. And in the not-so-drastic situations, it's a matter of not replacing employees when they retire."

Brasfield said real trends can only be measured over several years.

"In my opinion, we are more on the routine end of decision-making, to operate leaner and meaner," Brasfield said. "It would be premature to take one year and say we can predict what will happen in the next four or five years."

Economists say the shifts from growing business and residential areas are constant.

"It's the law of physics: Whatever was up has to come down," said Keivan DeRavi, an economics professor at Auburn University Montgomery. "The traffic has been redirected, and there will be some shift and share" in sales revenue.

DeRavi agreed with Gee that the metro area is experiencing a population concentration change, and expects successful retailers, at the Riverchase Galleria, for example, to respond by catering to the needs of local customers. Another approach is to market by distinguishing the mall from its competitors. He says cities need to focus on keeping residents and their disposable incomes.

Those that can't will shrink and die out, DeRavi said.

Meanwhile, many economists look at the metro area as a whole, not a collection of city and county lines.

"More and more cities are redefining themselves and reinventing themselves," DeRavi said. "The (smaller) cities that are bleeding will be gone, because they can't provide a quality of life for business and communities unless there is an infusion of something extraordinary. But the heart and the soul will always be the big cities, like Birmingham."

Midfield is one small city that has suffered in retail tax collections, with a 40 percent decline last year.

"It's the economy as a whole," said Midfield City Clerk Cedric Brown. "People are just not spending money like they did."

Chelsea, Alabaster and Springville are among the areas attracting new residents.

"If one place gains, it's at the expense of another," said economic analyst Ahmad Ijaz of the University of Alabama's Center for Business and Economic Research.

UAB's Gee sees Birmingham, which fell just short of its $110 million sales tax projection, approaching a critical point in the next year. He cites new Mayor Larry Langford's 1 cent sales tax increase, a doubling of business licenses fees, as well as higher property tax assessments and occupational taxes as potential problems for the city.

"The consumer is strapped to get more and more taken out of their pocket, and they have less disposable income," Gee said. "If we don't see a negative in the city, it will be surprising."